Shares of NIO Inc. (NYSE: NIO) skyrocketed over 10% in pre-market trading on September 30, 2024, following the announcement of a significant investment in the company's China subsidiary, NIO Holding (NIO China).
NIO China secured an investment of 13.3 billion yuan (approximately $1.9 billion) from its parent NIO and a group of strategic investors. The fresh capital will be raised through the issuance of new shares in NIO China.
The strategic investors involved in the deal include Hefei Jianheng New Energy Automobile Investment Fund, Anhui Provincial Emerging Industry Investment, and CS Capital. These investors will collectively invest 3.3 billion yuan, while NIO itself will invest 10 billion yuan.
Upon completion of the investment transaction, NIO's stake in NIO China will decrease from 92.1% to 88.3%, with the strategic investors and other existing shareholders holding the remaining 11.7% stake. NIO also has the option to invest an additional 20 billion yuan by the end of 2025 to subscribe for more shares in NIO China on the same terms.
The capital injection is expected to provide NIO China with the necessary funds to support its operations and growth plans, potentially reducing the immediate dilution risk for NIO's listed company. Investors appear to view this move positively, as it demonstrates confidence in NIO's China business and the potential for future growth in the electric vehicle market.